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BA 342 Exam 2 > Chapter 11: Gov Stakeholder > Flashcards

Chapter 11: Gov Stakeholder Flashcards

Business, Government, and Regulation

1
Q

Fundamental Part of this chapter

A

How government impacts us

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2
Q

Interstate Commerce Act of 1887

A

Extensive federal government regulation of interstate commerce. Created the Interstate Commerce Commission which became the first federal regulatory agency and a model for future agencies.

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3
Q

Trust

A

An organization that brought all of or most competitors under a common control that then permitted them to eliminate most of the remaining competitors by price-cutting. They would restrict production and raise prices

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4
Q

Sherman Antitrust Act

A

The first in a series of actions intended to control monopolies in various industries. Outlawed any contract, combination, or conspiracy in restraint of trade, and it also prohibited the monopolization of any market.

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5
Q

The Sherman Antitrust Act was used to break up which companies

A

Standard Oil Company, American Tobacco Company

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6
Q

Clayton Antitrust Act

A

Augmented the Sherman Antitrust Act. Outlawed price discrimination that gave favored buyers preference over others and forbade anti-competitive contracts, whereby a company would agree to sell only to suppliers who agreed not to sell the products of a rival competitor.

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7
Q

Federal Trade Commission

A

Intended to maintain free and fair competition and to protect consumers from unfair or misleading practices.

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8
Q

Legislation in the New Deal by Franklin Roosevelt

A

Securities Act of 1933 and Securities and Exchange Act of 1934

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9
Q

Securities Act of 1933 and Securities and Exchange Act of 1934

A

Aimed at curbing abuses in the stock market, stabilizing markets, and restoring investor confidence in order to prevent a second depression.

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10
Q

Full Employment Act

A

The government assuming responsibility for restoring prosperity and promoting economic growth through public works programs.

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11
Q

Sarbanes Oxley Act

A

Stricter regulation to publicly traded businesses

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12
Q

Two Ethical Systems of Belief

A

Individualistic ethic of business

Collectivisitc ethic of government

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13
Q

Four Business Beliefs

A

Individualistic ethic
Maximum concession to self-interest
Minimizing the load of obligations society imposes on the individual (personal freedom)
Emphasizes inequalities of individuals

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14
Q

Four Government Beliefs

A

Collectivistic ethic
Subordination of individual goals and self-interest to group and group interests
Maximizing the obligations assumed by the individual and discouraging self-interest
Emphasizes equality of individuals

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15
Q

Interaction occurs among which three things

A

Business
Government
Public

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16
Q

The Government influences Business through

A

Regulation, taxation, and other forms of persuasion

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17
Q

Business influences the Public through

A

Advertising and public relations

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18
Q

The Public influences the Government through

A

Political process, voting, special-interest groups, contributions

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19
Q

The Government influences the Public through

A

Politicking, Political influence, Public policy formation

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20
Q

The Public influences Business through

A

Interest Groups, Not Buying Products (the marketplace), Protests

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21
Q

Businesses influence the Government through

A

Lobbying

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22
Q

Two kinds of influence that the government has on businesses

A

Nonregulatory

Regulatory

23
Q

Two major issues under nonregulatory

A 
Industrial Policy (the role the government plays in shaping the national economy)
Privatization (whether current public functions such as public education should be turned over to the private business sector for more effective and efficient administration.
24
Q

Industrial Policy

A

Every form of state intervention that affects industry as a distinct part of the economy.

25
Q

A newer form of industrial policy is characterized by Robert Reich in his book

A

The Next American Frontier (national industrial policy that would identify winning (sunrise) industries and foster their growth)

26
Q

Privatization

A

Refers to the process of changing a public organization to private control or ownership

27
Q

The intent of privatization

A

To capture both the discipline of the free market and a spirit of entrepreneurial risk-taking

28
Q

Two functions government might perform under privatization

A

Producing (have your own employees who do it) a service and providing (has a program for and actually pays for a service) a service

29
Q

Example of providing a service

A

city government employing a private security firm to work a basketball game

30
Q

Example of producing a service

A

city governments own police force provided security at a basketball game

31
Q

Federalization

A

The return to the government sector

32
Q

Other nonregulatory governmental influences

A

Employer, Purchaser, Subsidies, Transfer Payments, Competitor, Loan Guarantees, Taxation, Monetary Policy, Moral Suasion (act in public interest)

33
Q

Regulation

A

The act of governing, directing according to rules, or bringing under the control of law or constituted authority.

34
Q

A federal regulatory agency is one that

A

Has decision making authority
Establishes standards or guidelines conferring benefits and imposing restrictions on business conduct
Operates physically in sphere of domestic business activity
Has its head and/or members appointed by the president
Has its legal procedures generally governed by the Administrative Procedures Act

35
Q

Four Major Reasons for Regulation

A

Controlling natural monopolies
Controlling negative externalities
Achieving Social Goals
Other Reasons

36
Q

Market failure

A

Failure of the free enterprise system

37
Q

Natural Monopoly

A

Exists in a market where the economies of scale are so great that the largest firm has the lowest costs and thus is able to drive out its competitors (ex. telephone companies, railroads, online platforms)

38
Q

Negative Externalities (Spillover effects)

A

Result when the manufacture or use of a product gives rise to unplanned or unintended side effects on third parties (producer and consumer are the first and second parties.

39
Q

Examples of negative externalities

A

Air pollution (ex. emissions), water pollution, improper disposal of toxic waste

40
Q

Consequence of negative externalities

A

Neither the producer nor the consumer pays for all the costs that are created by the manufacture of the product.

41
Q

Social Costs

A

Costs that are absorbed by society rather than being incorporated into the cost of making the product

42
Q

Examples of social goals of government

A

Harmful effects of a dangerous product or the unfair treatment of minorities resulting from employment discrimination. Keep people informed, preservation of natural security, consideration of fairness or equity, protection of those who provide essential services, allocation of scarce resources and protection of consumers from excessively high price increases

43
Q

Other reasons

A

Excessive competition

44
Q

Two types of regulation

A

Economic regulation and Social regulation

45
Q

Economic Regulation (focus on markets and economic variables) for selected industries

A

The classic or traditional form of regulation that dates back to the 1800s in the U.S. Regulatory bodies that regulate business behavior through the controlling and influencing economic or market variables such as prices, entry to and exit from markets and types of services offered.

46
Q

Three major costs of economic regulation

A

finance and banking
industry-specific regulation
general business

47
Q

Social Regulation (business practices affecting all industries)

A

Furtherance of societal objectives and focuses on business’s impacts on people. People in their roles as employees, consumers and citizens.

48
Q

Examples of economic regulation

A

Civil Aeronautics Board (CAB)

Federal Communications Commission (FCC)

49
Q

Current Trend in economic regulations

A

reregulation (financial stability oversight board)

50
Q

Examples of Social regulation

A

Equal Employment Opportunity Commissions (EEOC)
Occupational Safety and Health Admin. (OSHA)
Consumer Product Safety Commission (CPSC)
Environmental Protection Agency (EPA)

51
Q

Current trend in social regulation

A

reregulation (Consumer financial protection bureau)

52
Q

Direct costs of regulation are most visible when

A

we look at the number of new agencies created, aggregate expenditures, and growth patterns of the budgets of federal agencies responsible for regulation

53
Q

Indirect costs of regulation

A

forms, reports, questionnaires that businesses must complete

54
Q

Induced costs of regulation

A

Innovation may be affected, new investment in plant and equipment may be affected, small businesses may be adversely affected

BA 342 Exam 2 (6 decks)

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